Under Armour has filed suit against Nike alleging that Nike has infringed certain Under Armour trademarks as a result of Nike’s use of the phrase “I Will” in advertisements. Under Armour alleges that Nike’s use of “I Will” infringes its trademark rights, dilutes a famous mark, e.g. the slogan “I will protect this house,” and constitutes unfair competition. Under Armour alleges that Nike launched an advertising campaign on its Facebook page and YouTube video page that repeatedly use the “I Will” trademark/tagline, and as a result, consumers have already associated Nike’s use of “I Will” with Under Armour.

Under Armour filed the lawsuit on February 21, 2013, in the United States District Court for the District of Maryland, Baltimore Division (1:13-cv-00571). Nike has not yet filed a response to the complaint. We will continue to monitor this action.

When we think of the typical reality television show today, we are generally focused more upon the outrageous conduct of the characters rather than the implications of the onerous terms of the contracts between the cast and company. However, intellectual property rights are currently directly in dispute between Michael “The Situation” Sorrentino and MTV owner Viacom over trademarks to the phrases he uses on the show “Jersey Shore.”

A trademark generally refers to a distinctive sign or indicator used by an individual or company in order to identify their products and services to the public, usually through a logo or brand. Using a trademark without the permission of the owner in certain products which may be similar or dissimilar would constitute trademark infringement, allowing the owner of a registered trademark to institute legal proceedings against the infringer.

Sorrentino has claimed in the past that many of the catch-phrases he uses on the show were developed prior to filming, with the intention of using such phrases in the show and later asserting trademark rights. On August 22, 2011, Sorrentino, through his company, MPS Entertainment, filed a registration with the Trademark Board for the term “twinning”, with the intent to use the phrase on t-shirts. On August 15, 2012, MTV owner Viacom filed papers at the Trademark Trial and Appeals Board stating that it owned any and all catch-phrases that Sorrentino develops on the show.

So what is Viacom’s basis for such a position? It can all be traced back to the oppressive Participant Agreement Sorrentino signed with the studio that produced the original “Jersey Shore.” In that Participant Agreement, Sorrentino waived the rights to “all ideas, gags, suggestions, themes, plots, stories, characters, characterizations, dialogue, text, designs, graphics, titles, drawings, artwork, digital works, songs, music, photography, video, film, and other material whether or not fixed or reduced to drawing or writing, at any time heretofore or hereafter created or contributed by me which in any way related to Jersey Shore.”

Nonetheless, this was just the original contract between the parties. After the show became popular, Sorrentino and Viacom signed an amended contract which reasserted the above rights, adding “The above language shall not be construed to grant to Artist or otherwise allow Artist the right to issue t-shirts featuring Artist’s quotes from the series.” Viacom followed this up with an additional provision that states “The above language shall not in any way limit any previous grant of rights to the Producer.”

Based upon this Participation Agreement, Viacom stated in papers filed with the Trademark Trial and Appeals Board that “Under the terms of the Participant Agreement Form, all rights in any intellectual property relating to Jersey Shore belong to 495 Productions Inc., the production company which creates the programs in the Series, which in turn assigned those rights by separate contract to Remote Productions Inc., a wholly owned subsidiary of Viacom. Therefore, Viacom is the rightful owner of all rights in and to the “twinning” mark and slogan.”

These developments highlight the carelessness of individuals who are explicitly willing to sign away their personal rights just for a chance at becoming a celebrity. Production companies are well aware of this phenomenon, and seemingly are in a position of power when proposing terms. However, this doesn’t mean that Sorrentino was permanently placed in such a position; remember, he did sign an amended contract. Perhaps a smarter way to deal with such a situation would be the path Karen J. Connelly took in her 2005 case against ValueVision Media. (Connelly and S.Y.K., LLC v. ValueVision Media, Inc. d/b/a ShopNBC, 393 F. Supp. 2d 767 (D. Minn. 2005).

Connelly worked as a television program host of the corporation, and her initial contract was similarly as oppressive as Sorrentino’s, forcing her to sign away all “inventions, innovations, or improvements in the method of conducting Employer’s business or otherwise related to Employer’s business, including new contributions, improvements, ideas, and discoveries, whether patentable or not or otherwise protectable by copyright, trademark, common law or trade secret law.” However, as Connelly grew in popularity, she also had an opportunity to sign an amended contract, which did in fact in retain some trademark rights. Perhaps if Sorrentino would have taken advantage of his opportunity to sign an amended contract he wouldn’t be in the situation he finds himself in.

Last month, the USPTO issued new rules and provided information that will be useful to trademark practitioners. In May 2011, the USPTO published the third edition of the TTAB Manual of Procedure (TBMP), which is the first update since 2004. The latest edition “incorporates all case law, statutory changes, and changes to the Trademark Rules of Practice and Federal Rules where applicable as of November 15, 2010.” The complete version can be downloaded here. Trademark practitioners before the Trademark Trial and Appeal Board (TTAB) will need to review the changes and become familiar with these new rules.

In addition, building on its successful patent dashboard, the USPTO launched a trademarks dashboard. This dashboard, in the USPTO’s Data Visualization Center, provides up-to-date information about trademark filings at the USPTO, such as the average time to the first action, average total pendency of an application, number of applications, and other relevant statistics. This information will allow trademark attorneys to better inform their clients of the delays they may face in filing for a trademark. The USPTO now has three dashboards (patent, trademark, and policy and external affairs) that provide current statistics for the public, which builds on Director Kappos’ goal of providing more transparency about USPTO procedures.

The Patent Reform Act of 2011 portends yet another problem for small business folks trying to develop technology, and more importantly trying to enforce it. We have written about the pending legislation in prior posts. If it passes the US Congress, and if the “first to file” patent rule is therefore adopted by the USPTO as the law, patents will go to those with superior resources, in-house legal departments and the wherewithal to file patents on a moment’s notice. Gone will be the rule that “invention” is the starting point. It will be the result of a race to the PTO.

This is only part of the current IP problem for small businesses however, and the bigger problem is litigation cost. Small businesses simply cannot afford to bring or defend intellectual property lawsuits. If they are the plaintiff, it is likely that they have been given advice by counsel on the anticipated expense of patent or trademark enforcement litigation. Legal fee costs, expert witness costs, deposition costs, demonstrative evidence for trial costs and lost opportunity time for employees can add up quickly and it is important for the client and counsel to set a budget and to discuss each phase of the litigation with a projection of costs. Sadly this cost discussion is often ignored and we have received calls from potential clients who have exhausted their litigation budgets and who are nowhere near a settlement or trial. Frustrated they seek new counsel, but often new counsel is hampered by the inability to properly fund the ongoing litigation.

More difficult perhaps is the plight of the small business (or individual) defendant in an IP suit. These litigants are often ill-prepared for the costs and rigor of defending litigation in Federal Court. Having never been sued before, but having read about the high cost of lawsuits, they frequently seek legal counsel with the plea: “Can we end this quickly as I can’t afford to be in a lawsuit?” When Plaintiff is seeking to shut down production and sale of the new defendant’s chief product line, the answer to this question may not be easy. I tell them sure – we can end it early – all you need to do is stop making the product that is your main source of revenue, agree never to make it again, pay the plaintiff money for their alleged damages and pay all of their legal fees. These legal fees are generally not insignificant and may have been generated by one or more large law firms at enormous billing rates.

The client, who may even have solid defenses, is then faced with a difficult choice between: 1) Ignore the defenses and cave in quickly with all of the resultant cost and loss of income; 2) Engage in some litigation to try to establish some leverage for a favorable settlement or 3) Take the chance that expensive litigation will, over time, allow a favorable result and perhaps even an award of attorney’s fees to repay the defendant for the litigation cost. It is option 2 which poses the problem of delicate balancing by lawyer and client. How much litigation and cost is enough to create favorable settlement leverage? The client needs to balance the revenue/profit of the allegedly offending product or mark, against the phased cost of litigation. We can project that phase one (investigation, pleadings, Federal Rule initial disclosures, status conference before the court etc) might cost “x” dollars. The client can decide whether that cost is appropriate against the revenue stream attributable to the product or mark, and determine when to make the settlement move. There is never, of course, any guarantee that the settlement option will work and therein lies the balancing act problem. The client may get stuck in long litigation and need to simply fight its way out. Good communication between lawyer and client is critical to making these decisions.

Plaintiff Taza Systems, LLC filed suit against Defendants Taza 21 Co., LLC, et al. in the Western District of Pennsylvania on January 19, 2011. Plaintiff alleges that it owns various federally-registered service marks, all of which include the term “TAZA,” and has used these marks to identify its restaurant and bar services continuously since 2005. Plaintiff alleges that Defendants have been on notice of these marks, yet have used the name “TAZA” to identify and advertise their restaurant services without permission from Plaintiff. ﻿﻿﻿﻿Plaintiff has asserted claims of trademark infringement, dilution, unfair competition and cyberpiracy. Defendants have not filed a response to the Complaint.

On January 5, 2011, Entrepreneurial Ventures Capital Co., LLC filed an action against V.P. Racing Fuels, Inc. for trademark infringement, dilution of trademark rights and unfair competition. According to the Complaint, Plaintiff alleges that it owns the mark, “WORK THE MACHINE,” and claims that Defendant has been using “FUEL THE MACHINE” in violation of Plaintiff’s rights. Plaintiff is seeking, inter alia, injunctive relief and damages. Defendant has not filed a response to the Complaint.

2010 gave us a number of important decisions in the intellectual property field. The Bilksi decision regarding the patentability of business methods was eagerly awaited from the Supreme Court. In addition, the Federal Circuit issued a number of key decisions involving false marking, the written description requirement, patent misuse, and patent term extensions.

Bilksi v. Kappos—130 S.Ct. 3218 (2010)

Bilski was one of the most anticipated cases of the year. The Supreme Court considered whether business method patents are patentable subject matter under the Patent Act. As the Court is want to do, it did not substantially clarify the standards. Nonetheless, three key points emerged from this decision.

1. Business method patents are not per se unpatentable subject matter, although they still might be (or should be) difficult to get.

2. The Federal Circuit’s machine or transformation test for patentability under § 101 is not the sole test, although it is still a very useful clue for determining whether a process meets the requirements of § 101. Few processes that do not meet this test would be patentable.

3. The three previous exceptions to the broad standards of patentability under § 101 still exist—laws of nature, physical phenomena, and abstract ideas are not patentable.

American Needle, Inc. v. National Football League—130 S.Ct. 2201 (2010)

American Needle was a non-exclusive National Football League Properties (NFLP) licensee for certain apparel that bore NFL team insignias. In December 2000, the NFL decided to only grant exclusive licenses, and American Needle did not receive one. American Needle sued, claiming that the NFL’s licensing practices violated § 1 of the Sherman Antitrust Act. The Seventh Circuit found no violation, but the Supreme Court reversed.

While not a purely IP case, this case is at the intersection of IP and antitrust laws. The NFL claimed that the NFLP was a joint venture that was formed to develop, license, and market NFL IP rights. Section 1 of the Sherman Act prohibits concerted action that restrains trade. The key inquiry in this case was whether the NFL acts as a single decisionmaker in the IP licensing arena or whether the NFLP brings together independent decisionmakers. The Court concluded that while the NFL may in some areas act like a single decisionmaker (for scheduling, rules, etc.), in the IP arena each team is pursuing its own interests and directly competing against the other teams. Thus, the decision by the NFLP to issue exclusive licenses was concerted action that deprived the marketplace of independent action by each team and thus could state a claim for a violation of § 1 of the Sherman Act. The Court noted that a joint venture could be governed by antitrust laws in some aspects of its business, while not in others. The Court remanded to the lower courts to address the substance of the claims.

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